IGP-M is an acronym that stands for General Market Price Index . This index is one of the most widely used meters to track price changes and to measure inflation.Included in the prices evaluated by the index are various types of products and services offered in the market, from the raw materials for industry to the final price of the items offered to consumers.
How is the IGP-M calculated?
The IGP-M is recorded monthly and the responsibility for the monthly calculation of the index is from Fundação Getúlio Vargas (FGV).
For it to be calculated it is necessary that the market prices are monitored month by month, with a follow-up of the rise and fall of the values of the products and services offered.The price check is made based on the reference month, which is determined from the 21st day of a month until the 20th of the following month.
Examples of prices that are analyzed for IGP-M calculation are:
- raw materials for the manufacture of industrial products,
- agricultural items,
- spending on education,
- pieces of clothing,
- spending on health,
- values of public transport tickets.
What is inflation?
Inflation corresponds to the rate of change suffered by the prices of the products and services that are available for sale in the market.
When it is verified that there has been an increase in prices there is an inflation record . If the opposite occurs and prices have fallen, there is a deflation .
What is the IGP-M used for?
The calculation of the IGP-M is used to monitor the growth or fall in inflation. It is important to assess whether the real is at an economic moment of appreciation or devaluation. This means that, in case inflation has increased, the real “is worth less” because the money has less buying power in relation to other periods with lower inflation.
But the index also has other uses. The IGP-M is used as the basis for the calculation for the updating of rental agreements or service contracts. For example: to make the annual update (correction) of the values of real estate leases or of water and electricity charges.The IGP-M can also be used by people who make financial investments. By monitoring the index, you can reduce the risk of financial loss and decide the most appropriate time to make certain investments.
What is the accumulated IGP-M?
The accumulated IGP-M is the average of the index values in the period of one year . It is also called the annual IGP-M and is used to make corrections to contract values that are updated once a year.